Delhi District Court
M/S R P Singhal Builders Pvt Ltd vs Municipal Corporation Of Delhi on 3 May, 2025
IN THE COURT OF SH. ANIL KUMAR SISODIA:
DISTRICT JUDGE, COMMERCIAL-04: CENTRAL:
TIS HAZARI COURTS: DELHI.
CS (COMM) 1574/2023
M/s R.P. Singhal Builders Pvt. Ltd.
Regd. Office: CP-87, Pitampura,
Delhi-110034
And Corresponding address:
B-253, Inder Enclave, Phase-II,
Kirari Suleman Nagar,
Delhi-110086
Through its Director
Mr. Narender Jha ............Plaintiff
Vs
MUNICIPAL CORPORATION OF DELHI
Office at: Dr. SPM Civic Centre,
4th Floor, Pt. JLN Marg,
New Delhi-110002
Through its Commissioner .............Defendant
Date of filing of the suit : 12.12.2023
Date of reserving judgment : 15.04.2025
Date of judgment : 03.05.2025
Judgment
1.This is a suit for recovery of Rs. 37,52,228/- (Rupees Thirty-Seven Lakhs Fifty-Two Thousand Two Hundred & Twenty-Eight Only) along with interest @ 14% p.a. filed by the plaintiff against the defendant.
2. Briefly stated the facts of the case are that the plaintiff is a Digitally signed ANIL by ANIL KUMAR SISODIA KUMAR Date:
SISODIA 2025.05.03 16:03:45 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 1/18 company duly registered under the Companies Act, 1956. The defendant department is a government body providing civic amenities and infrastructure work for the public at large within its territorial jurisdiction. The defendant had awarded the work order no. 24 dated 24.09.2015, work order no. 40 dated 16.02.2016 and work order no. 41 dated 18.02.2016. The work of work orders were completed by plaintiff within stipulated period to the full satisfaction of then concerned officers of the defendant department. The defect liability period of all these works was 5 years which has already expired on 30.11.2020 for work order no. 24 and on 30.04.2021 for the work order no. 40 & 41. The final bills of the said awarded works were already paid by the defendant.
During the defect liability period, the concerned Executive Engineer of the defendant department sent letter bearing ref. no. 1149, 1150 and 1151 dated 19.03.2019 with respect to above three work orders thereby raising following demands as recovery under 10 CA: -
Work Order Amount (In
Number Rs.)
WO no. 24 4,36,547/-
WO no. 40 14,75,484/-
WO no. 41 4,51,428/-
Total 23,63,459/-
It is further stated that Clause 10 CA is not applicable in all three works as 10 CA is applicable only in those works in which period of execution of work is more than 6 months. However, in all three work orders, the period of work is not more than 3 months. In letter dated 19.03.2019, the recovery was claimed under clause 10 CA and therefore, the same is not tenable. Plaintiff sent reply of the letter of Executive ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:04:01 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 2/18 Engineer of defendant dated 19.03.2019 vide its letter dated 02.04.2019 by speed post thereby raising objection on the ground that recoveries worked out by the audit department vide letter no. 413/1625 in all above work orders are under Clause 10 CA whereas Clause 10 CA is not applicable in all three work orders. Although not admitted, however, the recoveries are not based on the terms of the agreement as per the quantity of bitumen and other expenses in procuring the bitumen. The audit department had also not considered the cartage of bitumen while working out the same and requested to send the letter to audit department to consider the points raised by the plaintiff while working out of the amount i.e. cartage of bitumen from refinery to hot mix plant and actual consumption of bitumen in work.
3. It is further stated that when the defendant department has not intimated regarding the action taken on the request made by the plaintiff, the plaintiff sent another letter on 22.05.2019 by speed post (duly served on 28.05.2019) stating all the facts and raising objection of the process adopted by the audit department. It is stated in this letter that the market rate of bitumen emulsion considered in agreement/WO no. 41 was Rs. 39389.49 per MT whereas in agreement/WO no. 41 was Rs. 29906.49 per MT. As the tenders for both the works were invited through same NIT, therefore, the prevailing market rate of bitumen emulsion for working out the justification of rates should be same as in case of bitumen VG-30 used for mix, which are same in both cases i.e. Rs. 40051.00 per MT. The facts mentioned above are also same in case of agreement/WO no. 24 wherein the market rate for bitumen emulsion was considered @ Rs. 39389.49 per MT in place of Rs. 29906.49 MT.
4. It is further stated that plaintiff has submitted letter dated ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:04:15 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 3/18 01.07.2021 on 02.07.2021 vide diary no. 291, 292 and 293 thereby requesting to release the security amount of all 3 works orders as the defect liability period of these works already completed. The plaintiff again submitted letter dated 01.11.2022 vide diary no. 1444, 1445 and 1446 thereby reiterating its request for release of security amount. Despite service of letter of the plaintiff, the concerned officers of the defendant department have neither given the reply nor released the security amount and withheld amount, total Rs. 29,56,719/- with respect to all three works to the plaintiff. Thereafter, plaintiff sent legal notice dated 02.02.2023 to the Commissioner and Executive Engineer of defendant department which was duly served on 03.02.2023. However, defendant did not reply to the legal notice. Finding no other alternative, plaintiff has filed the present suit against the defendant.
5. Summons of the suit were issued to the defendant. The defendant was served with the summons. Defendant has filed the WS and stated that the present suit is without any cause of action since recoveries were made by MCD as per agreement. The plaintiff has approached the court with unclean hands and has concealed that it is a material breach of the agreement between the parties that disentitles him from any relief as sought. It is stated that defendant has recovered the amount from the plaintiff under Clause 10 CA of the GCC as per agreement/NIT. It is stated that as per circular of Amendment of General Conditions of Contract 10 CA was issued by the defendant vide D/EE/(P)-I/2012- 2013/14 dated 11.07.2012 shall be applicable in this contract as per agreement/NIT conditions. It is stated that work order was awarded to plaintiff and during the defect liability period, the defendant sent letters enclosed the copy of audit para 1 of the audit report for the year 2015- 2016 bearing ref. no. 1149, 1150 and 1151 all dated 19.03.2019 with Digitally signed ANIL by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:04:25 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 4/18 respect to above mentioned all work orders thereby raising demands to deposit the amount as recovery of Bitumen under Clause 10 CA which was never refuted by plaintiff. It is stated that plaintiff failed to comply with the terms and conditions of the agreement/NIT as he was contractually required to. Plaintiff failed to give satisfactory reply to the defendant demand notice and defendant made recovery from the plaintiff. It is stated that plaintiff never approached appropriate or filed an appeal against action taken by Audit Department of the defendant. Plaintiff has failed to comply with and adhere to contractual obligations set out in the work orders and the GCC. The defendant also raised preliminary objection that the defendant has recovered the amount from the plaintiff under Clause 10 CA of GCC as per agreement/NIT. It was stated that the Notice Inviting Tender (NIT) issued by the defendant sets out relevant terms and conditions and makes it clear that GCC 10 CA and special conditions of contract shall be applicable to the plaintiff. The plaintiff accepted the conditions mentioned in the NIT and never refuted the same. The plaintiff failed to disclose the cause of action to maintain the present suit.
On merits the contents of the plaint have not been denied as regards award of work contract to the plaintiff and completion of work by the plaintiff. However, it has been submitted that plaintiff has not submitted the bill as required under GCC. It was denied that Clause 10 CA is not applicable in the three work orders. It is stated that during the defect liability period, concerned Executive Engineer of the defendant had sent letters bearing reference no. 1149, 1150, and 1151 dated 19.03.2019 w.r.t to the three work orders raising demand as recovery under GCC. It was further stated that plaintiff sent reply to the letters of Executive Engineer of defendant dated 02.04.2019 by speed post without giving satisfactory reply and raised only objection that Clause 10 CA ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:04:35 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 5/18 was not applicable on the three work orders. However, the facts are that the terms and conditions of the agreement/NIT shall be applicable and according to agreement/NIT 10 CA is also applicable which was accepted by the plaintiff at the time of execution of the agreement and till dated never refuted. Plaintiff failed to submit satisfactory reply to consider the points raised by the plaintiff while working out of the amount. It is denied that when the defendant department has not intimated regarding the action taken on the request made by plaintiff, the plaintiff has sent another letter on 02.05.2019 stating all facts and raising objection of the process adopted by the audit department. It is admitted fact that the during the audit on the accounts of the Executive Engineer for the year 2015-2016 a scrutiny of accounts file revealed that in respect of the work orders in question, the rates of bitumen as per the bills used in execution of the respective work less that the rates at the time of working out the justification for the award work. Therefore, the department adjusted the amount accordingly. The plaintiff did not refute the recoveries in its letter dated 01.07.2021 on 02.07.2021 vide dairy no. 291, 292 and 293 thereby requesting to release only security amount of all 3 work orders as the defect liability period of these work orders as the defect liability period of these works already complete. Thereafter, the defendant department has released the remaining amount of security amount after considering letters adjusted the amount as per audit report to the plaintiff. It has been submitted that once the plaintiff is aware of its obligation under GCC and the law, issuance of legal notices will not absolve him of legal and contractual duties. Other contents of the plaint have been denied and a prayer has been made for dismissal of the plaint.
6. Plaintiff has filed replication to the written statement of the ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:04:44 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 6/18 defendant and has reiterated the contents of the plaint. It has been denied that plaintiff has not submitted the bills for payment and is in breach of the agreement between the parties.
Issues
7. After completion of pleadings, the following issues were framed on 23.04.2024: --
1. Whether the defendant has recovered a sum of Rs.23,63,459/- from the plaintiff in respect of work order no.24, 40 and 41 under clause 10 CA of GCC? (OPD)
2. Whether the suit of the plaintiff is without cause of action? (OPD)
3. Whether the plaintiff is entitled for recovery of Rs.37,52,228/- as prayed for? (OPP)
4. Whether the plaintiff is entitled for the interest on the aforesaid amount, if so, at what rate and for which period? (OPP)
5. Relief.
Plaintiff's Evidence
8. Plaintiff examined himself as PW-1 and has filed affidavit by way of evidence Ex.PW-1/A and relied upon the following documents: -
Sr. Document Exhibit
No.
1 Registration certificate PW-1/1
2 Company Master Data obtained from MCA PW-1/2
Website of plaintiff
3 Resolution dated 01.02.2023 PW-1/3
4 Work orders dated 24.09.2015, 16.02.2016 and PW-1/4 to
18.02.2016 PW1/6
5 Letter of defendant dated 19.03.2019 PW-1/7
ANIL Digitally signed
by ANIL KUMAR
KUMAR SISODIA
Date: 2025.05.03
SISODIA 16:04:55 +0530
CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 7/18
6 Reply of plaintiff dated 02.04.2019 with postal PW-1/8 to
receipts PW1/10
7 Track report PW1/11
8 Letter of plaintiff dated 22.05.2019 with postal PW-1/12
receipt
9 Track report PW-1/13
10 Letter of plaintiff dated 02.07.2021 (3 Nos.) PW-1/14 to
PW-1/16
11 Letter dated 01.11.2022(3 Nos.) PW-1/17 to
PW-1/19
12 Legal notice dated 02.02.2023 PW-1/20
13 Postal receipts PW-1/21 &
PW-1/22
14 Service reports PW-1/23 &
PW-1/24
15 Certificate of non-starter report PW-1/25
PW-1 was cross examined by counsel for the defendant and thereafter PE was closed.
9. Defendant has examined Sh. Madan Kumar, Assistant Engineer (Project-II), West Zone, MCD, under Dabri Flyover, Delhi as DW-1, who tendered his affidavit Ex.DW1/A and relied upon the following documents: -
Sr. Document Exhibit
No.
1 Copy of agreement in respect of the work Ex. DW-
order no. 24, dated 24.09.2015 1/1
2 Copy of agreement in respect of the work Ex. DW-
order no. 40, dated 16.02.2016 1/2
3 Copy of agreement in respect of the work Ex. DW-
order no. 41, dated 18.02.2016 1/3
4 Copy of NIT dated 27.05.2015 in respect Ex. DW-
Digitally signed
ANIL by ANIL KUMAR
KUMAR SISODIA
Date: 2025.05.03
SISODIA 16:05:04 +0530
CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 8/18
of work order no. 24 1/4
5 Copy of NIT dated 10.08.2015 in respect Ex. DW-
of work order no. 40 and 42 1/5 (which
is already
exhibited
as Ex. PW-
1/D-1
(colly)
6 Copy of Circular No. 14 dated 11.07.2012 Ex. DW-
mentioned in NIT 1/6
7 Copy of the contingent bill in respect of the Ex. DW-
work order no. 24 1/7 (OSR)
8 Copy of the contingent bill in respect of the Ex. DW-
work order no. 40 1/8 (OSR)
9 Copy of the contingent bill in respect of the Ex. DW-
work order no. 41 1/9 (OSR)
10 Copy of the Final Bill in respect of the Ex. DW-
work order no. 24 1/10
11 Copy of the General Condition of Contract Ex. DW-
in respect of all the work orders 1/11
DW-1 was cross examined by counsel for plaintiff and thereafter DE was closed.
10. I have heard Ld. Counsel for the plaintiff and Ld. counsel for the defendant and have perused the record including the pleadings of the parties, evidence led by them and the written submissions filed by the counsel for plaintiff.
FINDINGS Issue no. 1:
Whether the defendant has recovered a sum of Rs. 23,63,459/- from the plaintiff in respect of work order no.24, 40 and 41 under clause 10 CA of GCC? (OPD) Digitally signed ANIL by ANIL KUMAR SISODIA KUMAR Date:
SISODIA 2025.05.03 16:05:15 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 9/18
11. The onus of proving this issue was cast on the defendant.
Counsel for plaintiff has argued that Clause 10 CA is not applicable in the work orders no. 24, 40 and 41 and the recovery proposed by Audit Department was not applicable. It was argued that PW-1 in his cross examination dated 10.07.2024 has denied that Clause 10 CA is applicable in the work orders. It was argued that plaintiff had submitted the receipts of purchase of bitumen in the department concerned before preparation of final bills and the final bill was paid in all the three work orders. He argued that DW-1 Madan Kumar in his cross examination has admitted that final bills were passed on 15.12.2016, 13.03.2018 and 11.04.2018 and has further deposed that he could not tell on what basis the rate of bitumen had been mentioned in column no. 6 of Ex. PW-1/7 against the work order no. 20, 40 and 41 without clarifying the same from the Audit Department. However, despite time being given to DW-1, he could not receive any written clarification from the concerned department and admitted that as per the GCC (Ex. DW-1/11) Clause 10 CA is not part of condition mentioned in Ex. DW-1/11. Counsel for the plaintiff has also argued that defendant has not filed any documents in compliance of the instruction given by Audit Department through letter dated 28.04.2017 which proves that Clause 10 CA is not applicable in the work orders no. 24, 40 and 41. It was argued that the reliance placed by the defendant on the circular dated 11.07.2012 is wrong and incorrect as the circular was issued prior to the date of tender of these work orders and DW-1 has admitted that 'Schedule F' is part of the GCC but the same has not been filed by the defendant as Clause 10 CA is not applicable there. It was also argued that DW-1 has admitted in his cross examination that no notice was issued to the plaintiff nor any suit for recovery was filed against the plaintiff and that the recovery was made on 22.09.2023. DW-1 also ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:05:26 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 10/18 failed to place on record the circular to show that defendant can make recovery directly after approval of the final bill and therefore recovery made by defendant is illegal and therefore, plaintiff is entitled for recovery of the amount claimed in the suit.
12. Per Contra, counsel for the defendant has argued that the origin of the work order no. 24, 40 and 41 is from the Notice Inviting Tender (NIT) dated 27.05.2015 Ex. DW-1/4 and NIT dated 10.08.2015 Ex PW- 1/D-1. Clause 14 of the said NIT refers to Clause 10 CA of GCC which makes it clear that Clause 10 CA was applicable on the work orders awarded to the plaintiff. He also argued that the circular dated 11.07.2012 Ex. DW-1/6 also provides that the modified conditions of the contract 10 CA and table of materials to be inserted in Schedule F for Clause 10 CA has to be incorporated in the approved NIT /tendered conditions in the contract and instructions were given to the approving authority to ensure that performa of Schedule is attached and the base rate of material considered under Clause 10 CA are incorporated in the draft NIT as per the guidelines provided in CPWD Works Manual. Counsel for defendant has also argued that PW-1 Narender Jha in his cross examination has admitted that the work orders were signed after reading and understanding the terms of NIT and GCC. However, he was not even aware if Clause 10 CA is applicable in the work order or not. When PW-1 was shown the two NIT, he replied that plaintiff had not objected the para 14 of NIT dated 10.08.2015 regarding the applicability of Clause 10 CA of GCC. PW-1 also deposed that plaintiff had not filed any appeal before any concerned officer against the order of recovery passed by defendant. It was argued that from the perusal of the NIT Ex. PW-1/D-1 (colly), it is clear that defendant has rightly recovered the amount from the plaintiff as per the demand letter of the defendant dated ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:05:36 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 11/18 19.03.2019.
13. Perusal of the circular Ex. DW1/6 dated 11.07.2012 shows that South Delhi Municipal Corporation had issued notification for modifying the conditions of contract 10 CA by incorporating the same in the NIT /tender condition of the contract. The NIT for the work orders no. 24, 40 and 41 were issued in 2015 incorporating GCC 10 CA in view of the aforesaid circular. PW-1 Narender Jha in his cross examination admitted the NIT Ex. PW-1/D-1 (colly) in the present case which have incorporated the Clause 10 CA in the contract. PW-1 has also admitted that the work orders were signed after reading and understanding the terms of NIT and GCC. He also admitted that plaintiff did not object to para 14 of NIT dated 10.08.2015 regarding the applicability of Clause 10 CA of GCC. Hence, the arguments advanced by the counsel for plaintiff that Clause 10 CA is not applicable to the present work orders is without any substance.
14. The argument advanced by the counsel for plaintiff that DW-1 could not explain on what basis rate of bitumen had been mentioned in Column 6 of page 30 and 31 (part of Ex. PW-1/7) against the work orders nos. 24, 40 and 41 is of no help to the case of the plaintiff when PW-1 himself has admitted in his cross examination that plaintiff had never challenged the orders of recovery passed against the plaintiff by filling the appeal before the concerned officer. Similarly, the claim of the plaintiff that the defendant had not taken into consideration the cartridge of bitumen while working out the recovery by the Audit Department has also remained unsubstantiated as the plaintiff has not filed any invoices/goods receipts in this regard.
ANIL Digitally signed
by ANIL KUMAR
KUMAR SISODIA
Date: 2025.05.03
SISODIA 16:05:45 +0530
CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 12/18
15. In view of the aforesaid discussion, I am of the considered opinion that defendant has been able to discharge the onus cast on the balance of preponderance of probabilities. The issue is accordingly decided in favour of the defendant and against the plaintiff.
Issue no. 2 & 3
2. Whether the suit of the plaintiff is without cause of action? (OPD)
3. Whether the plaintiff is entitled for recovery of Rs. 37,52,228/- as prayed for? (OPP)
16. Both these issues are taken up together as they can be disposed of by common discussion. The onus of proving issue no. 2 has been cast on the defendant whereas the onus of proving issue no. 3 has been cast on the plaintiff.
17. Defendant has claimed that the suit filed by the plaintiff is without cause of action as defendant has recovered a sum of Rs. 23,63,459/- under Clause 10 CA of GCC as per the agreement /NIT and therefore, the present suit lacks any cause of action.
18. Per Contra, counsel for plaintiff has claimed that plaintiff is entitled for the recovery of the suit amount as Clause 10 CA was not applicable to the work orders nos. 24, 40 and 41 awarded to the plaintiff.
19. As already held in the foregoing issue, defendant was within its right to recover Rs. 23,63,459/- from the plaintiff as per the demand raised by the defendant vide letter dated 19.03.2019 Ex. PW-1/7 as Clause 10 CA has been found applicable on the work orders awarded to the plaintiff. Nevertheless, it is an admitted case that plaintiff had ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:05:56 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 13/18 deposited a sum of Rs. 27,56,719/- as security for the work orders as per the following details:
Work Order Number Amount
24 Rs. 9,01,559/-
40 Rs. 13,53,152/-
41 Rs. 5,02,008/-
It is also not disputed by the defendant that a sum of Rs. 2 lakhs was withheld by the defendant against the work order no. 41. There is also no dispute to the fact that the plaintiff had completed the work within the stipulated period and the defect liability period has also expired and no complaint was received by the defendant during the defect liability period. Plaintiff has also admitted that it had received a sum of Rs. 2,46,160/- from the defendant on 28.11.2023. Therefore, if the sum of Rs. 23,63,459/- recovered by the defendant from the plaintiff under Clause 10 CA and the payment of Rs. 2,46,160/- is deducted from the total security amount of Rs. 27,56,719/- deposited against the aforesaid work orders and the amount of Rs. 2 lakhs withheld against work order no. 41 of the plaintiff, the plaintiff is still entitled for recovery of Rs. 3,47,100/- from the defendant. Hence, the suit filed by the plaintiff cannot be said to be without cause of action.
20. In view of the aforesaid discussion, the issues are decided in favour of the plaintiff and against the defendant and it is held that the plaintiff is entitled for recovery of Rs. 3,47,100/- from the defendant.
Issue no. 4:
Whether the plaintiff is entitled for the interest on the aforesaid ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:06:08 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 14/18 amount, if so, at what rate and for which period? (OPP)
21. The onus of proving issue has been cast on the plaintiff. The plaintiff has claimed pendente lite and future interest @ 14% per annum on the ground that the present suit is a commercial suit between the parties and the defendant had wrongfully withheld the amount of the plaintiff which has resulted in losses to the plaintiff.
22. It has been argued on behalf of the defendant that in terms of circular no. D/EE(P)-III/27/2006-07 dated 19.05.2006 as mentioned in clause 9 (as amended from time to time) of the General Conditions, there is no such provision for interest and as such the claim of interest is unwarranted.
23. I do not find any strength in the submissions made by Ld. Counsel for the defendants. In the case of Varinder Jeet Singh Vs. Municipal Corporation of Delhi & Anr., 2013 (134) DRJ 284, Hon'ble Ms. Justice Hima Kohli inter alia held that: -
"15. It is settled law that if a person is deprived of the use of money to which he is legitimately entitled, he has a right to be monetarily compensated for the said deprivation. [Ref: (1992) 1 SCC 508:
Secretary, Irrigation Deptt. Govt. of Orissa v. G.C. Roy; (2004) 5 SCC 65: Ghaziabad Development Authority v. Balbir Singh, and (2009) 8 SCC 507: Sri Venkateswara Syndicate v. Oriental Insurance Company Ltd. and Anr.] The object behind awarding interest to a party, who has suffered loss, due to a legitimate deprivation of the enjoyment of the use of money that he was entitled to rightfully, is to balance the equities and while doing so, ANIL Digitally signed by ANIL KUMAR KUMAR SISODIA Date: 2025.05.03 SISODIA 16:06:26 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 15/18 the facts involved in each case must be examined by the Court.
16. The statutory provisions with regard to payment of interest are laid down in Section 3 of the Interest Act, 1978, that provides that in any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, if the proceedings do not relate to a debt payable by virtue of a written instrument at a certain time, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable, then interest will be claimed, till the date of institution of the proceedings."
24. Reliance is also placed upon the case of NDMC & Others Vs. Shish Pal MANU/DE/1200/2018 wherein it was observed,
45. In the present case, the combined effect of the Clauses and the Circular and amendments, set out above, is that if the Corporation does not procure funds, it is not liable to even pay the Contractor any interest and the Contractor has no remedy.
This by itself would mean that such a Clause could be read as leading to a contract without consideration and hence unlawful under Section 23 of the Contract Act. The Corporation being an instrumentality of State, such a contract would also be opposed to public policy under Section 23 of the Contract Act. Section 46 of the Contract Act is also clear that if no time for performance of a Digitally signed by ANIL ANIL KUMAR SISODIA KUMAR Date:
SISODIA 2025.05.03 16:08:14 +0530 CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 16/18 contract is specified, it has to be performed within a reasonable time. Reading these provisions together, it is clear that an open- ended Clause which in effect says that the payment shall be made at an undetermined time in the future, subject to availability of funds, in a particular head of accounts is wholly unreasonable and such a term would also be unfair....
71. A conjoint reading of Clauses 7 & 9 along with the amendment dated 19th May, 2006, clearly shows that for the payment of bills, the Contractors have to follow the queue basis and as and when the amount is available under the particular head of account, the amount would be payable.
The amendment does not, however, have a condition that no interest is payable for delayed payment. Such a condition exists only in Clause 7. Clause 9, therefore, when read with the amendment has to mean that the Corporation itself considers 6 months and 9 months to be the reasonable periods for which the payments of the final bills can be held back. Obviously, therefore, if payments are made, whether on a queue basis or otherwise, beyond the period of 6 months and 9 months, interest is payable.
72. In view of the question of interest having been gone into detail and non-
payment having been held to be illegal by various Single Judges of this Court, in cases involving the Corporations, it is held that non-payment of interest beyond the period of 6 months and 9 months, as stipulated in Clause 9 of the General Conditions of Contract, would be contrary to law. Hence, the Contractors are entitled for payment of interest after a period of 6 months - 9 months respectively.
Digitally signed ANIL by ANIL
KUMAR
KUMAR SISODIA
Date:
SISODIA 2025.05.03
16:06:58 +0530
CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 17/18
25. The award of interest is discretionary as the contract nowhere mentions about the rate of interest, each case has to be adjudged on its own merit. However, considering the facts and circumstances of the case, this court is not inclined to grant pre suit interest.
26. In the facts and circumstances, I am of the view that the interest of justice would be subserved if the plaintiff is awarded interest @ 9% per annum on the amount of Rs. 3,47,100/- from the date of order till realization. Issue is accordingly decided in favour of the plaintiff and against the defendant.
Relief
27. In view of my findings on the issues herein above, the suit of the plaintiff is decreed partly. A decree of Rs. 3,47,100/- is passed in favour of plaintiff and against the defendant. The plaintiff shall be entitled for simple interest @ 9% per annum on the aforesaid amount from the date of filing of suit till its realization. The plaintiff shall also be entitled to the proportionate cost of the suit.
Decree sheet be prepared accordingly.
File be consigned to Record Room after due compliance.
Digitally signed ANIL by ANIL KUMAR
SISODIA
KUMAR Date:
SISODIA 2025.05.03
16:07:07 +0530
Announced in the open Court (ANIL KUMAR SISODIA)
Dated :03rd May, 2025 DISTRICT JUDGE-04, CENTRAL
TIS HAZARI COURT, DELHI
CS (COMM) NO. 1574/2023 M/s R.P. Singhal Builders Pvt. Ltd. Vs MCD Page No. 18/18